Business & Finance

Secaucus Real Estate Investing Firm Shut Down By State Of New Jersey

Secaucus Real Estate Investing Firm Shut Down By State Of New Jersey #Secaucus #Real #Estate #Investing #Firm #Shut #State #Jersey Welcome to Lopoid

SECAUCUS, NJ — This week, the state of New Jersey issued a cease-and-desist order to a real estate investment company based in Secaucus.

The company is National Realty Investment Advisors (NRIA).

One of the owners of the company is Thomas Nicholas Salzano, or Nick Salzano. Salzano was arrested by the FBI last March, after an hours-long stand-off with Secaucus Police and FBI agents where he refused to come out of his Riverside Court condo.

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The FBI took him into handcuffs and he was charged with defrauding a female client out of hundreds of thousands of dollars. The FBI alleges that, in 2019, he used a forged bank document in an attempt to try and lure the woman to invest more in one of NRIA’s real estate ventures.

Also, just last week, NRIA filed for bankruptcy.

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On Tuesday of this week, the New Jersey Attorney General ordered NRIA to stop doing business, as the state says the company fraudulently sold at least $630 million in securities to investors in New Jersey and across the nation from 2018 to 2022.

The principals of the company are listed by the Attorney General as:

Salzano, of Secaucus, portfolio manager of the NRIA Fund Rey Grabato, of Hoboken, president of the NRIA Fund and 80-percent owner of NRIA D. Coley O’Brien, of Southampton, NY, co-CIO of the NRIA Fund and 100-percent owner of NRIA Capital Partners Arthur Scutaro, of Bloomfield, executive vice-president of project management and advisor to the NRIA Fund

According to the NJ Attorney General, their alleged fraud worked this way: The company sold membership in a real estate investment fund known as the NRIA Fund to at least 1,800 investors across the country, including 380 investors in New Jersey alone.

Salzano and the other men touted the NRIA Fund as a billion-dollar-plus real estate development enterprise focused on the “ground-up” development of townhomes, condo complexes, luxury residences and mixed-use rental developments, said acting NJ Attorney General Matt Platkin in the cease-and-desist order, which you can read here.

NRIA claimed all money invested in their fund would be used to purchase land or property at below-market value prices, which would then be developed for sale at a large profit.

To entice would-be investors, the company used a nationwide advertising campaign that included radio spots and high-profile messaging on billboards located at the entrance to the Lincoln and Holland tunnels.

The billboard messaging guaranteed returns of 12 percent on the investments, with the added possibility of obtaining returns as high as 21 percent. The Attorney General warned that investment returns such as this are often “too good to be true.”

Complaints from consumers prompted the New Jersey Bureau of Securities to investigate the company.

NRIA also ran a pyramid scheme, the Attorney General said: To conceal the company’s poor performance, its owners used investors’ own money (rather than actual cash flow) to fund annual distributions, used straw purchasers to create non-existent sales of certain residential units, and inflated the company’s performance.

Also, the company created multiple fake websites, aimed at reducing the chance that Internet searches would reveal that the two men who ran the company — Salzano and Scutaro — had previously been cited by the Federal Trade Commission (FTC) for engaging in consumer fraud when they used to run a now-shuttered company known as NorVergence.

After NorVergence, the FTC permanently barred Salzano from similar conduct in the future.

As part of their scheme to enrich themselves at investors’ expense, the state of New Jersey says those four men used millions of investor dollars to make lavish payments to family members — including a salary paid to Salzano’s wife for a no-show job.

The principals also hired family-owned or controlled companies, including a construction firm where Salzano’s son was the chief financial officer, and companies owned by Grabato’s relatives that were used to create imposter entities and websites.

The state of New Jersey called NRIA’s actions “egregious.”

“It’s the very kind of conduct that undermines public confidence in our financial institutions and — ultimately — in investing,” said Acting Bureau of Securities Director Amy Kopleton.

“The fraudulent conduct identified by our Bureau of Securities in this case is striking,” said Acting Attorney General Platkin. “Today, we are taking action to stop their unlawful conduct and to put the public on notice. If an investment opportunity promising high guaranteed returns sounds too good to be true, it usually is.”

“The rules are not complicated: if you are selling securities in New Jersey, you must comply with our securities laws,” said Acting Division of Consumer Affairs Director Cari Fais. “These respondents lured investors in New Jersey and across the nation with empty promises and, in some cases, went to great lengths to conceal their own fraudulent conduct. The action we’ve taken today is meant to halt their dishonest, predatory conduct once and for all.”

In addition to the purported “billion-dollar-plus” real estate development enterprise, NRIA also invested up to a quarter of all investor funds in commercial mortgage-backed securities, the bulk of which were below investment grade (commonly known as “junk bonds”), in an effort to generate returns it had promised to investors but could not deliver through the NRIA Fund’s real estate projects.

The state says NRIA leveraged the junk bonds through repurchase agreements with financial institutions. This use of repurchase transactions to create leverage significantly increased the risk of the junk commercial mortgage-backed securities portfolio to those who invested in the NRIA Fund, but the risk was never disclosed to investors, the state says.

Read about Salzano’s arrest in March of 2021: Secaucus Man Arrested By FBI In Financial Fraud Case: A Secaucus man who worked as a financial portfolio manager was taken into custody by the FBI, and is charged with defrauding a client out of hundreds of thousands of dollars, charged the U.S. Attorney at their Newark field office.

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